Friday, February 26, 2021

Friday Night Links

  • In the past few months, I have stated the market is showing some signs of froth and the speculative growth stocks popular with retail investors are in an outright bubble. My solution was to go long banks and energy stocks, while avoiding high multiple growth stocks. It has worked out swimmingly in 2021. The overall market is more expensive than average, but this isn't an "everything bubble." There are still more opportunities now than there were in February 2020 because many reopening plays haven't fully recovered. [Alex Pitti]
  • The AMLP listed ETF is a collection of the larger fossil fuel MLPs that have not converted to a C-Corp profile. Notwithstanding its disadvantageous tax structure, its current yield of nearly 10%, or about 825bps wide to the T10yr, can only be explained as either a stupendous tax-loss motivated liquidation, or the realization that MLPs are a feat of financial engineering that is inherently flawed. Fossil fuels will not be eliminated in the near future, and their transportation from the ground to the gas tank is a necessary function that at some point must be a profitable venture. It is my fervent hope that MLPs are not the subject matter for Betheny McLean’s next best seller. A 10% dividend for a listed 20-stock Index is the wrong number; either AMLP will rise in price, or the 19.5 cent dividend will be reduced to 14 cents. I suppose it is possible that the underlying MLPs are functionally a $200bn Ponzi scheme that relied upon rising oil prices to maintain the illusion of profitability; but I suspect the answer is a bit more banal. What we likely have here is a mismatch in capital where Retail investors have tossed in the towel and Institutional investors can't or won't buy a (K-1) partnership structure. [Convexity Maven]
  • At the current valuation level, growth stocks trade nearly 12 times the P/B valuations of value stocks. The relative valuation has been close to this level only twice over the 57-year history of our analysis: the peak of the dot-com bubble and the nadir of the global financial crisis. Our decomposition indicates that the change in relative valuation since mid-2007 contributed –7.2 pps per year and turned the 1.1% structural return into the –6.1% per year realized value return. [Research Affiliates]
  • Timber growers across the U.S. South, where much of the nation’s logs are harvested, have gained nothing from the run-up in prices for finished lumber. It is the region’s sawmills, including many that have been bought up by Canadian firms, that are harvesting the profits.  Sawmills are running as close to capacity as pandemic precautions will allow and are unable to keep up with lumber demand. The problem for timber growers is that so many trees have been planted between the Carolinas and Texas that mills are paying the lowest prices in decades for logs. [WSJ
  • My impression is that Antifa foot soldiers tend to be downscale whites with antisocial personalities, ugly, nasty people such as meth addicts and child molesters who have had problems with the law. You could immediately tell that the theory that an Antifa false-flag operation had engineered the foolish Jan. 6 Capitol intrusion was mostly conservative cope because MAGA roughnecks are substantially better-looking on average than Antifa hooligans. On the other hand, Antifa are much better organized. Congressman Jerry Nadler (D-NY) could declare in late July with a straight face that reports of Antifa violence in Portland are “a myth” in part because Antifa is, as Ngo says, a “phantom movement by design.” Project Veritas infiltrated Portland’s Rose City Antifa and found that new members were required to undergo six months of training and vetting. Ngo reprints the fifteen-page syllabus that Veritas obtained, which reads like a college course in how to be a violent leftist revolutionary. Antifa’s tactics are cleverly designed to look mostly peaceful on national TV. For example, demonstrators frequently throw water bottles at the police, which appears almost harmless on TV. But what viewers don’t know is that they’ve frozen the normally flimsy bottles rock-hard. [Sailer]
  • It has been suggested that no other variable in biology accounts for differences in lifespans across species as well as the fat composition of cell membranes, specifically the amount of omega-6 and other polyunsaturated fats that are contained in cells (“peroxidation index”). [link]
  • In September of last year, the fast-food chain Chipotle went through its latest P.R. crisis, after introducing a new item to its menu: the Tex-Mex cheese dip known as queso. It was a risky move, and Chipotle knew it. Among Texans, queso is a subject of deep passion and pride. “When I die, drizzle queso over my grave,” the food writer, editor, and native Texan Helen Hollyman told me recently. “Queso is a Texan birthright,” she added, “the most critical and expected staple at any gathering, besides BBQ.” Its most common preparation, for eating with tortilla chips, consists of just two substances: a brick of Velveeta, Kraft’s highly meltable “pasteurized prepared cheese product,” and a can of Ro-Tel Diced Tomatoes and Green Chiles. Making a batch is not much harder than opening a bag of Cheetos, especially if you do the melting in the microwave, and the payoff is about the same; it’s junk food, in the most satisfying, flattering sense of the term.  Chipotle, though, which bills itself as being somewhat health- and sustainability- conscious, announced its commitment to “cracking the code” of queso made “with only real ingredients.” The cheese in its recipe was aged Cheddar, combined with both tomatoes and tomato paste, plus three kinds of chile peppers and more than a dozen other ingredients. The public’s consensus was swift: real or not, Chipotle’s queso was just plain wrong. [New Yorker]
  • The most important investing theme in the world today is the potential reversion to long term trend of value vs growth (VvG). The covid case numbers are crashing and it appears as though herd immunity (through a combination of vaccines and previous infection) has been reached. The catalyst for the VvG inflection will be the economy reopening combined with shortages stemming from a year of lockdown socialism and the printing of $3.4 trillion in a year. The pent up demand for many types of goods and services is so high that we could see a one-time price spike, almost like a currency devaluation, that benefits old-economy goods producing companies and ends the bubble in the Robinhood fad stocks. [CBS]
  • [M]ost people are only capable of believing some sort of average of what the people around them believe. (Maybe that saves the simulation a lot of processing power on the simulated non-player characters?) So to them, if Elizabeth Holmes is getting magazine covers it would be utterly unthinkable to actually try her testing device (even for n=1 sample) before sinking hundreds of millions of dollars into a business partnership with her. [CBS]

1 comment:

CP said...

We will have an Asian or Subcontinental politician running for major office and *winning* while quoting FBI crime stats verbatim by 2028 at the latest. Ignoring the unspecified race of the victim here, this is the situation on the ground in every major urban center in which we've imported those races to serve as the replacement upper middle class in our new racial caste system. These people aren't going to be able to flee to the exurbs like whites have and will. They're too tied to the urban economic engine to truly escape exposure to the urban zoos we've created. They also cannot be browbeaten with "history" in the form of blood libel like whites have. The system can't cancel the entire managerial class they just spent enormous sums to import, they sort of need them to keep things going. So the end result will be a technocrat like Yang finally having enough and promising to implement Sinofuturism hardcore (boots on skulls). Facts are that blacks are sort of done as a political force in this country. They only ever had power via the black/white racial discourse but "New Americans" have grown to such a size demographically that the black vote increasingly no longer matters in the major metro areas. IMO, the best takes over the summer were those that analyzed BLM as the last gasp of black political relevancy. It might seem absurd to say this as we watch images if blacks get shoved in our eyes from every media source but I think it's fundamentally true. Remember the Biden transition team call that leaked? Support for BLM wasn't dropped just because we're run by the most cynical people on earth, they really do have a "problem" in their coalition whereby hispanics aren't having any of that bullshit. If the 2020 cycle wasn't the first time the hispanic vote mattered more, it will happen by 2024, 2028 at the latest. Blacks basically burned up their last political capital in exchange for meaningless slogans and media representation and the crackdown on street behavior is coming. And it's going to be hilarious. Sure, pro-White politics won't be within the Overton Window any time soon, but at least we'll be able to laugh at the complete institutional collapse in support for blacks within our lifetime. My political observations come from me observing something and wanting to inform the other party "that's stupid and you're going to regret it". The talented tenth blacks of 2040 are going to look back and realize it was never better than right now when whitey was still in charge.